HKSAR v. Scheffers Reinier

DCCC 1123/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1123 OF 2008

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Reasons for Sentence

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The charges

1.The Defendant pleads guilty to 2 charges (1^st and 2^nd charges) of dealing with property known or reasonably believed to represent proceeds of an indictable offence, contrary to section 25(1) of the Organized and Serious Crimes Ordinance.

2.Both charges relate to his acts between 27 June and 6 September 2008.  The 1^st charge involves Euro 127,825.80 whereas the 2^nd charge involves Euro 250,136.76.   

The facts

3.The Defendant is a Dutch ordinarily residing in the Netherlands.  He was the director of a Dutch company, Arts and Lights (“A & L”).  Its principal business was to sell oil painting products.  There was an arrangement with Rabobank of the Netherlands that once his clients places a purchase order with A & L, A & L would be authorized to send an automatic payment instruction to the responsible bank.  The responsible bank would then pay A & L on behalf of A & L’s clients. 

4.As A & L’s business turned sour, the Defendant was in financial difficulties.  He stole his clients’ money by submitting false payment instructions to Rabobank for bogus purchase orders allegedly made by his clients.  The monies were paid to A & L’s accounts held at Fortis Bank and Rabobank respectively. 

5.On 27 June 2008, the Defendant bought a shell company, Inworld Limited (“Inworld”).  On the same day, at Hong Kong and Shanghai Banking Corporation (“HSBC”) in Hong Kong were opened an account for Inworld and another for himself. 

6.The 1^st charge relates to a series of transfers of Euro 127,825.80 in total from a bank account of his in the Netherlands and another bank account of his in Brussels to his said HSBC account in Hong Kong between 27 June and 6 September 2008.  He then withdrew a total of Euro 10,000.00 from his HSBC account between 1 and 6 September 2008. 

7.The 2^nd charge relates to a transfer of Euro 250,136.76 from a bank account of his in Brussels to the said Inworld’s HSBC account in Hong Kong  between 27 June and 6 September 2008.    He then remitted a total of Euro 172,000.00 between 1 and 6 September 2008 out of Inworld’s HSBC account into another account in Salzburg.   

8.On 6 September 2008, when the Defendant was about to leave Hong Kong, he was intercepted by the police.  A search on him yielded Euro 100,000 cash. 

9.Under caution, he said:

(1)  In the name of A & L, he had submitted bogus purchase orders to the banks and stolen money from his clients;

(2)  He subsequently sold A & L to a man, van de Kamp, so that van de Kamp then as the proprietor on the record would take the blame;

(3)  Van de Kamp instructed him to set up Inworld and open an account at HSBC in Hong Kong;

(4)  He would remit a part of the stolen money to a bank account of his in Brussels according to van de Kamp’s instructions.  The money would then be remitted to Hong Kong;

(5)  He also remitted another part of the stolen money to his HSBC account;

(6)  He did not know why the money had to be remitted to Hong Kong;

(7)  He knew that the money was proceeds of crime.  

10.The Immigration Department has record of his arrival in Hong Kong on 27 June 2008 and departure from Hong Kong on 28 June 2008.  He came to Hong Kong on 26 August 2008.  On 6 September 2008, he was arrested when he was about to depart Hong Kong 

The Defendant’s circumstances

11.He was born and ordinarily resides in the Netherlands.  He is now 42 years of age.  He lived with his wife and 2 daughters, aged 4 and 11 years respectively.  He has a clear record in Hong Kong.  He received education until he was 18 years old.  He had worked in turn as a sale representative, insurance agent, taxi driver, and shop owner.   He established A & L 15 years ago.  It was doing quite well until the economic recession in 2008.  He had to borrow Eur 500,000 as working fund.  He committed the present offences in an effort to keep it going.  After his arrest, he and his wife were bankrupt.  Their matrimonial home and household belongings had been taken by the creditors.  Furthermore, his wife had divorced him.  She is suffering from serious depression and is presently on anti-depressant.  He is most grieved by his having to serve time in Hong Kong where he can do nothing to make up with his beloved wife.  His children cannot visit him, either.   

12.The Defendant has no ties except a friend in Hong Kong.  They came to know each other in a pub in Hong Kong.  She would sometimes pay visit to him and bring him necessities as required.

Mitigation put forward

13.The Defendant’s counsel puts forward the following mitigating factors:

(1)  plea of guilty;

(2)  return of the stolen money subject to a deficiency of EUR 145,000;

(3)  hardship of a foreigner serving imprisonment afar from home;

(4)  double jeopardy upon return to Netherlands;

(5)  bankruptcy of the Defendant and his wife after the arrest;

(6)  the wife’s divorce after the arrest;

(7)  humanitarian grounds including loss of matrimonial home, the wife’s depression and the children’s welfare.   

Principles of sentence

Examples of money laundering sentences

14.As stated by Mayo VP in HKSAR v Mak Shing CACC 322 of 2001:.

12.  There are no guidelines for offences of this nature.  The reason of this being that the circumstances of each case may vary almost infinitely.

15.The applicant in that case handled in his 3 bank accounts the equivalent of around HK$2.5 million out of RMB14.56 million, the proceeds of a major theft in China.  The other people in the scheme handled the remaining sum.   A starting point of 4 years was considered to be apposite to reflect the seriousness of the offences in which there was an international element. The Court regarded that Hong Kong had to take a very serious view of such matters if its international reputation was not to be sullied.

16.In HKSAR v Shing Siu-ming and others [1999] 2 HKC 818, there was a major drug trafficking conspiracy case over a lengthy period with an international element. The 1st and the 2nd applicants rendered considerable assistance to the drug trafficker and took an active part in sharing the proceeds of over $2.6 million and over $1.5 million respectively.  A starting point of 7 years’ imprisonment was considered appropriate. 

17.In HKSAR v XU Xia Li CACC 395/2003, the 1^st and the 2^nd applicants laundered $11 million and $3 million respectively.  They made specific trips from Canada to Hong Kong to process the banking transactions.  The Court of Appeal regarded 3 years’ imprisonment to be the proper starting point.   

18.In HKSAR v Chow Ying-ki CACC 378/2004, the applicant handled around $3 million most likely to be the proceeds from drug trafficking activities.  The Court of Appeal upheld a starting point of 4 years’ imprisonment.   

19.In HKSAR v Jain Nikhil CACC 405/2006, the victims were promised of a share in an inheritance subject to their sponsorship of the initial processing fee.  The victims parted with $6.6 million.  Despite the timely freezing of the culprits’ accounts, $3.9 million could not be recovered.  The sentencing judge took 5 years as the starting point upon highlighting the aggravating feature of the use of false passports for trips to Hong Kong in processing the bank transfers.  The Court of Appeal upheld the sentence.    

Foreigner serving jail term in Hong Kong

20.The Defendant’s counsel submits that there shall be some recognition for a foreigner serving a jail term in Hong Kong.  Away from home and in a foreign jail, he will feel the environment doubly disagreeable than will a local prisoner. 

21.To this submission, the answer can perhaps be found in HKSAR v Hong chong-chi [2002] 1 HKC 295, 302, where it was said:

The applicant only came to Hong Kong for the purpose of furthering his criminal enterprise.  Anyone who acts in this way, to undermine the laws of Hong Kong, deserves no sympathy.  What is more, it should be made clear to non-residents of Hong Kong, whether from the Mainland (or Taiwan) or from far-flung jurisdictions, that if they come here in order to break the law, they will be treated no differently, and certainly no more leniently, than criminals who are normally resident here.

Double jeopardy upon return to Netherlands

22.There is no expert legal evidence as to what the Defendant will face in the Netherlands upon his return.  The Court cannot treat such speculation as a mitigating factor.  Although the case of Chung Shing Garments Co Ltd v R [1963] HKLR 940 dealt with the mitigation based on the possible dismissal of the applicant as a result of the conviction for export summonses, the observations of Blair-Kerr J in, at 950 – 951, would be most apposite as an analogy:

A very common submission in the case of a servant who has been convicted is that “in all probability” he will be dismissed from his employment.  Another submission frequently made is in regard to the “possibility” or “probability” of deportation.  In England and in Hong Kong where the Executive has by law the power of deportation, it is frequently argued that the court should take this into consideration in assessing what the sentence should be.  Such an approach has recently been criticized in R. v. Edgehill.  Under the Commonwealth Immigrants Act 1962 courts are empowered in certain cases to recommend deportation after passing sentence.  In that case, the Court of Criminal Appeal said (page 44):-

“The court … does not feel that the intention of the Act is that a recommendation for deportation should, as it were, be part of the punishment in the sense that a court is justified in saying: “We will give a reduced sentence because we are making a recommendation for deportation … This court is quite satisfied that that is the wrong approach.  Courts should deal with the offence on its merits and sentence the prisoner to the penalty or sentence which he deserves, and, having done that, should deal with the recommendation for deportation quite separately.”

Those words illustrate how dangerous it is for a court to take into consideration the possibility of future events happening for the purpose of assessing sentence now.  A convicted defendant may not be dismissed by his employers.  The Executive may not deport him.  But even when it is morally certain that some such consequential action will be taken by some other authority, I find it very difficult to understand why a court should be asked to take that into consideration when deciding what is a proper sentence for the offence of which the defendant has been found guilty.  The question whether a convicted servant should or should not be dismissed from his employment is a collateral issue.  The employer may have a discretion whether he shall dismiss his employee.  In exercising that discretion he is entitled to know the true gravity of the offence which the defendant has committed.  He can only judge that by the charge, the facts on which the charge is based and the sentence imposed.  It seems to me that only confusion can result if a court attempts to forecast how an employer is going to exercise his discretion and attempts to take this unknown quantity into consideration when deciding upon sentence.

Concurrent and consecutive sentences

23.In Attorney General v Cheung Pit-yiu CAAR 11/ 1988, Cons VP explained the nature of concurrent sentences:

6．This Court has more than once had cause to restate the general principle that concurrent sentences are only appropriate for offences that can properly be said to have been committed in the course of a single transaction. That can hardly be said of offences involving the possession of drugs, as the judge below correctly believed, on occasions which occurred in separate months. We agree therefore with the submission of Mr. Cross, who now appears for the Attorney General, that the concurrent sentences in fact passed below would be wrong in principle, unless of course, the principle of overall totality required that in the circumstances no further punishment should be imposed. 

24.In R v Yau Kwok-tung [1987] HKLR 782, the Applicant was convicted of two charges of handling stolen goods and one charge of robbery.  He was sentenced to two years’ concurrent imprisonment on each handling chargeand four years’ imprisonment on the robbery charge.  The handling was to beserved consecutively to the robbery, namely a total of six years’ imprisonment.  On appeal, Roberts CJ said:

The earlier transactions, relating to the handling of stolen goods took place about 2 and 4 weeks before the robbery and were totally unconnected with it. We see no reason why a Judge should not, in such circumstances, order sentences to run consecutively. (at 783)

25.In HKSAR v Woo Chung-hing Cr App 19/ 2002, the Applicant committed two distinct and separate offences of trafficking on different days.  Lugar-Mawson J, sitting as an additional judge in the Court of Appeal said he could “see no reason why the Judge should not have passed wholly  consecutive sentences on the Applicant.”

Totality

26.In R v McKechan [2004] EWCA Crim 212, David Clark J said totality was a “principle that consecutive sentencing for multiple offences must not be used so as to produce a total sentence which is excessive for the overall offending”. 

27.In HKSAR v Zhen Futing Cr App 509/2003, the Applicant was charged with two offences of possession of arms without a licence, two of possession of offensive weapons, and one of resisting a police officer in the due execution of his duty.  Stock JA said, at para. 18, that “Judges must always sentence accurately for each particular offence and having done so, only then address the question of totality.”

The sentence I pass

28.For the 1^st charge, there is a wide international element.  I take 2 years and 3 months as the starting point.  I give a one-third discount for his clear record and plea of guilty.  He has consented to the return of such part of the stolen money frozen at the bank.  This will speed up the process for restitution to the clients.  I give an extra month as discount.   

29.For the 2^nd charge, there is a wide international element.  I take 3 years as the starting point.  I give him a one-third discount for his clear record and plea of guilty. 

30.He has consented to the return of such part of the stolen money frozen at the bank.  This will effectively speed up the process for restitution to the clients.  I give an extra month as discount for this charge.     

31.His trips to Hong Kong could have served no other purpose than the furtherance of his criminal enterprise.  The fact of his serving a jail term in Hong Kong is no doubt a sad thing.  Based on Hong chong-chi (supra), while I have much sympathy towards his separation from his family and culture, I do not accept it as a mitigating factor.     

32.Based on Chung Shing Garments Co Ltd, I do not accept the possibility of another term of imprisonment in the Netherlands a mitigating factor.  As regards the bankruptcy of the Defendant and his wife after the arrest, the wife’s divorce, the loss of matrimonial home, the wife’s depression, and the children's welfare, I am of the view that the general direction of how bad things might go, as they indeed do now, could have been foreseen by the Defendant before he embarked on the criminal enterprise.  They do not operate as mitigating factors.     

33.There are no other mitigating factors.  The sentence is therefore 1 year and 5 months for the 1^st charge and 1 year and 11 months for the 2^nd charge.  I do not think they formed a single transaction.  They shall run consecutively.  However, on totality, I make the following adjustment:

(1)  1^st charge: 1 year and 5 months;

(2)  2^nd charge: 1 year and 11 months, 11 months of which consecutive to 1^st charge, the other part of which concurrent with 1^st charge.

The total length is 2 years and 4 months' imprisonment.